Judge: Stephen P. Pfahler, Case: 24STCV01157, Date: 2024-10-08 Tentative Ruling
Case Number: 24STCV01157 Hearing Date: October 8, 2024 Dept: 68
Dept.
68
Date:
10-8-24 c/f 7-22-24
Case
#24STCV01157
Trial
Date: Not Set
ARBITRATION
MOVING
PARTY: Defendants, Soho West Hollywood, LLC, et al.
RESPONDING
PARTY: Plaintiff, Chloe Mills
RELIEF
REQUESTED
Motion
to Compel Arbitration
SUMMARY
OF ACTION
On February 28, 2022, Plaintiff Chloe Mills was hired as an
“under 27 membership manager ... for the recruitment and management of
approximately 400 members who were under the age of 27.” In August 20022,
Plaintiff took on events manager responsibilities, though compensation was not
increased. In September 20022, Plaintiff interviewed for a new position as
“membership manager” and requested a higher salary commensurate with the prior
employee. The new position was never confirmed, but Plaintiff alleges the promotion
effectively occurred in February 2023, based on a removal of the “under 27
manager” title and assignment of new responsibilities. Plaintiff also received
a “superb” performance review the same month.
As part of the review process, Plaintiff requested a pay
increase beyond the standard three percent increase, also in conformance with
the new job responsibilities. The request was denied.
Meanwhile a Memorial Day event was planned with a “Playboy”
association, which Plaintiff contends was approved by management. On May 5,
2024, Plaintiff was terminated as a result of the “Playboy” planned event.
On January 16, 2024, Plaintiff filed a complaint against Defendants
Soho West Hollywood, LLC, Soho House & Co., and Jarret Stuhl for 1. Gender Discrimination
in Violation of FEHA; 2. Sex/Gender Harassment in Violation of FEHA; 3. Race
Discrimination in Violation of FEHA; 4. Retaliation in Violation of the FEHA; 5.
Failure to Prevent Discrimination, Harassment or Retaliation in Violation of
FEHA; 6. Wrongful Termination in Violation of Public Policy; and, 7. Whistleblower
Retaliation (Labor Code section 1102.5)
RULING: Granted.
Requests
for Judicial Notice: Granted.
·
The
court takes judicial notice of the existence of the trial Court orders, but not
any factual findings. (Kilroy v. State of California (2004)
119 Cal.App.4th 140, 147-148; Sosinsky v. Grant (1992) 6 Cal.App.4th 1548, 1565.) The orders also
constitute unpublished material, and are therefore not citable for any
reference. (Cal. Rules of Court, rule 8.1115(a); Rittiman v. Public Utilities Com. (2022) 80 Cal.App.5th 1018, 1043 (footnote 18).)
Defendants
Soho West Hollywood, LLC, Soho House & Co., and Jarret Stuhl move to compel
arbitration on the complaint of plaintiff Chloe Mills. Defendants move to
compel arbitration based on the arbitration provision in the “Dispute
Resolution Agreement” (DRA). Defendants maintain all claims are subject to
arbitration under the terms of the agreement; nothing in the agreement is
precluded under Ending Force Arbitration Act (EFAA) in that Plaintiff lacks
underlying facts establishing exclusion; and the agreement in no way presents
unconscionable terms. Plaintiff in opposition challenge enforcement of the
agreement on grounds of the lack of evidence of an executed agreement; exemption
under the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act
(EFAA); and, unconscionability on the basis of an improper adhesion contract. Defendants
in reply reiterate the electronically signed agreement, denies any
unconscionability, and challenges any sexual harassment preemption.
The court first considers the Federal Arbitration Act (FAA).
“The FAA shall govern the interpretation and enforcement of this Agreement. If
the FAA is held not to apply to this Agreement for any reason, and the state or
district in which Employee is employed recognizes the enforceability of this
Agreement and the arbitration award, then this Agreement and the arbitration
award or decision are enforceable under the laws of the state or district in
which Employee is employed.”
The Soho entities engage in interstate commerce and
therefore contend FAA rules govern. [Declaration of Rimma Kanter.] Barring a
conflict supporting a preemption of a specific provision under FAA, the court
adheres to the California standard for compelling arbitration in that FAA and
California adhere to the same standards for review of arbitration agreements.
The court finds no conflict with the FAA under the terms of the agreement. (Volt Information Sciences, Inc.
v. Board of Trustees of Leland Stanford Junior University (1989) 489 U.S.
468, 477–479; Victrola 89, LLC v. Jaman
Properties 8 LLC (2020) 46 Cal.App.5th 337, 346; see Adolph
v. Uber Technologies, Inc. (2023) 14 Cal.5th 1104, 1119; Viking River Cruises, Inc. v.
Moriana (2022) 142 S.Ct. 1906.)
“A written agreement to submit to arbitration an existing
controversy or a controversy thereafter arising is valid, enforceable and
irrevocable, save upon such grounds as exist for the revocation of any
contract.” (Code Civ. Proc., § 1281.) “On petition of a party to an arbitration
agreement alleging the existence of a written agreement to arbitrate a
controversy and that a party thereto refuses to arbitrate such controversy, the
court shall order the petitioner and the respondent to arbitrate the
controversy if it determines that an agreement to arbitrate the controversy
exists, unless it determines that: (a) The right to compel arbitration has been
waived by the petitioner; or (b) Grounds exist for the revocation of the
agreement.” (Code Civ. Proc., § 1281.2.)
The law creates a general presumption in favor of
arbitration. In a motion to
compel arbitration, the moving party must prove by a preponderance of evidence
the existence of the arbitration agreement and that the dispute is covered by
the agreement. “‘Under “both
federal and state law, the threshold question presented by a petition to compel
arbitration is whether there is an agreement to arbitrate.”’” (Long v. Provide Commerce, Inc. (2016) 245
Cal.App.4th 855, 861.) “Private arbitration is a
matter of agreement between the parties and is governed by contract law. (Platt Pacific, Inc. v. Andelson (1993)
6 Cal.4th 307, 313.) In a
motion to compel arbitration, the moving party must prove by a preponderance of
evidence the existence of the arbitration agreement and that the dispute is
covered by the agreement. The burden then shifts to the resisting party to
prove by a preponderance of evidence a ground for denial (e.g., fraud,
unconscionability, etc.). (Rosenthal v. Great Western Fin'l Securities Corp.
(1996) 14 Cal.4th 394, 413-414; Gamboa v. Northeast Community Clinic (2021) 72 Cal.App.5th 158, 164–165; Hotels Nevada v. L.A. Pacific Ctr.,
Inc. (2006) 144
Cal.App.4th 754, 758.) Any challenges to the formation of the arbitration agreement
should be considered before any order sending the parties to arbitration. The trier of fact weighs all evidence, including
affidavits, declarations, documents, and, if applicable, oral testimony to
determine whether the action goes to arbitration. (Hotels Nevada v. L.A. Pacific Ctr.,
Inc., supra, 144 Cal.App.4th at p. 758.)
Defendant
presents a copy of the arbitration agreement which indicates a digital
signature on February 28, 2022. [Declaration of Steven Filippo, Ex. C.] Plaintiff categorically denies ever signing
said agreement. [Declaration of Chloe Mills.]
The declaration of Filippo presents specific documented
evidence of the process for onboarding, including security protocols, and the
electronic signature process itself. [Filippo Decl., ¶¶ 3-8.] The documentary
evidence presents credible proof of the establishment of an account and change
of password on February 26 and 27, 2023, respectively. [Id., Ex. A-B.]
Plaintiff relies on the unsigned copy of the arbitration agreement presented as
a copy from the personnel file, the lack of counter signature by a Soho
representative, and denial of any “drop down” menu whereby Plaintiff selected
February 28, 2023, as the signature date. [Mills Decl.]
The court finds the copy of the agreement and electronic
evidence supports the finding of the presentation of the agreement, and
execution of the electronic signature. (Civ.
Code, § 1633.9; Espejo v. Southern California
Permanente Medical Group (2016) 246
Cal.App.4th 1047, 1062.) While the declaration
of Filippo in fact lacks a copy or indication of any signature from a Soho
representative, the continued employment by Plaintiff constitutes a basis for a
finding of acceptance of the arbitration agreement. (Gorlach v. Sports Club Co.
(2012) 209 Cal.App.4th 1497, 1508 accord Craig
v. Brown & Root, Inc. (2000) 84
Cal.App.4th 416, 420-421.) The court therefore
finds a valid, executed agreement, and declines to conduct an evidentiary
hearing.
The court
considers the terms of the agreement:
“[C]laims by employees for wrongful termination of
employment, breach of contract or covenant (express or implied), wrongful
discharge, fraud, discrimination, retaliation, and/or harassment of any type,
including, but not limited to, claims regarding race, sex, sexual orientation,
religion, national origin, age, pregnancy, veteran status, marital status, or
disability, or any other characteristic protected under federal, state, or
local law, any violation of federal, state, or local law, whether under common
law, statute, regulation, ordinance, or order, including, but not limited to,
any violation of the Age Discrimination in Employment Act, the Americans with
Disabilities Act, the Family and Medical Leave Act, the Fair Labor Standards
Act, the Employee Retirement Income Security Act, and/or the Uniformed Services
Employment and Reemployment Rights Act, and any state or local law equivalents
thereto, tort or personal injury claims, wage or overtime claims, or other
claims under any other state or local wage laws, and/or any other legal or
equitable claims and causes or action recognized by local, state, or federal
law or regulations.”
The court first considers the unconscionability arguments as
a defense to enforcement of the agreement. Plaintiff presents terse argument,
including an unfair adhesion contract, failure to provide a copy of the rules,
and improper limitation of discovery.
Unconscionability claims have both a “‘procedural’” and
“‘substantive’” element. (Stirlen v.
Supercuts, Inc. (1997) 51 Cal.App.4th 1519, 1531.) “‘Procedural
unconscionability’” concerns the manner in which the contract was negotiated
and the circumstances of the parties at that time. (Kinney v. United HealthCare Services, Inc. (1999) 70
Cal.App.4th 1322, 1329.) “‘The procedural element focuses on two factors:
“oppression” and “surprise.”
“Oppression” arises from an inequality of bargaining power which results
in no real negotiation and an absence of meaningful choice. “Surprise” involves
the extent to which the supposedly agreed-upon terms of the bargain are hidden
in the prolix printed form drafted by the party seeking to enforce the disputed
terms.’” (Stirlen v. Supercuts, Inc.,
supra, 51 Cal.App.4th at p. 1532.) “Substantive unconscionability” involves
contracts leading to “‘“overly harsh”’” or “‘“one-sided”’” results.’” …
“[U]nconscionability turns … on an absence of ‘justification “for it…” [and
therefore] must be evaluated as of the time the contract was made.’” (Ibid.)
In the employment context, a mandatory arbitration
agreement is enforceable, if it “(1) provides for neutral arbitrators, (2)
provides for more than minimal discovery, (3) requires a written award, (4)
provides for all of the types of relief that would otherwise be available in court,
and (5) does not require employees to pay either unreasonable costs or any
arbitrators’ fees or expenses as a condition of access to the arbitration
forum.” (Armendariz v. Foundation Health
Psychcare Services, Inc. (2000) 24 Cal.4th 83, 102.) Required execution of
an arbitration agreement as a condition of employment may constitute an
unconscionable provision, where the contract lacks mutuality and/or imposes a
disadvantage on the employee. (Armendariz
v. Foundation Health Psychcare Services, Inc., supra, 24 Cal.4th at pp.
114-118; Little v. Auto Stiegler, Inc. (2003)
29 Cal.4th 1064, 1071-1072.) A showing of procedural
unconscionability will not invalidate an arbitration clause, but can lead to
greater scrutiny under the substantive standard, thereby supporting
invalidation. (Davis v. TWC Dealer Group, Inc. (2019) 41 Cal.App.5th 662, 674 accord OTO, L.L.C. v. Kho (2019) 8
Cal.5th 111, 129-130.)
Following Armendariz and continued examination into unequal
bargaining circumstances challenging arbitration clauses, California law offers
further guidance into the adhesion contract circumstances (e.g. an agreement
substantively presented as “take or it leave it” the circumstances of which
potentially impose a disadvantage on the employee). “With respect to
preemployment arbitration contracts, we have observed that ‘the economic
pressure exerted by employers on all but the most sought-after employees may be
particularly acute, for the arbitration agreement stands between the employee
and necessary employment, and few employees are in a position to refuse a job
because of an arbitration requirement.’” (OTO, L.L.C. v. Kho, supra,
8 Cal.5th at pp. 126-127 accord Armendariz v. Foundation Health Psychcare
Services, Inc., supra, 24 Cal.4th at p. 115; Ramirez v. Charter
Communications, Inc. (2024) 16 Cal.5th 478 [322 Cal.Rptr.3d 825, 837]; Hasty
v. American Automobile Association of Northern California, Nevada & Utah
(2023) 98 Cal.App.5th 1041, 1055-1056; Serafin v. Balco Properties Ltd., LLC
(2015) 235 Cal.App.4th 165, 179-181; see Grand Prospect Partners, L.P. v.
Ross Dress for Less, Inc. (2015) 232 Cal.App.4th 1332, 1351; Serpa v.
California Surety Investigations, Inc. (2013) 215 Cal.App.4th 695, 705.)
While
the basis of review exists, the burden still remains on the challenging party
to establish the defense. (Rosenthal v. Great
Western Fin'l Securities Corp., supra,
14 Cal.4th at pp. 413-414; Gamboa
v. Northeast Community Clinic, supra, 72 Cal.App.5th
at pp. 164–165; Hotels Nevada v. L.A. Pacific Ctr., Inc., supra, 144 Cal.App.4th at p. 758.) Plaintiff
essentially relies on a conclusion of unconscionability based on citation to a
case involving certain potentially unfavorable terms and/or disclosures in
reverse mortgage contract, which also included an arbitration clause. (Flores v. Transamerica HomeFirst, Inc. (2001) 93 Cal.App.4th 846, 853-854.)
Notwithstanding the factual differences with the instant
case, given the direct denial of ever even seeing said arbitration agreement at
all, the court lacks facts determining any factual context for time to review
the document or consider alternatives. The court therefore finds no factual
basis of support for the argument of unconscionability. (OTO, L.L.C. v. Kho, supra,
8 Cal.5th at pp. 126-127; Hasty v. American Automobile
Association of Northern California, Nevada & Utah, supra, 98 Cal.App.5th 1041 [317 Cal.Rptr.3d at pp.
309-311]; Davis v. TWC Dealer Group, Inc. (2019) 41 Cal.App.5th 662, 674; Grand Prospect Partners, L.P. v. Ross Dress for Less, Inc., supra, 232 Cal.App.4th at p. 1349, 1352-1354.) “[A]lthough
adhesion alone generally indicates only a low degree of procedural
unconscionability, the potential for overreaching in the employment context
warrants close scrutiny of the contract's terms.” (Ramirez v. Charter
Communications, Inc., supra, 16 Cal.5th 478 [322 Cal.Rptr.3d at p.
838].) The circumstances stated in the declaration of Plaintiff support a
finding for a form of procedural unconscionability, but the court finds lacking
support in the substantive unconscionability support argument.
Again, the court finds Plaintiff executed the agreement and
accepted the terms.
On the claim regarding
insufficient discovery, the court also finds a lack of support. Plaintiff again
only offers a conclusion of unfair discovery limitations, without actually
establishing any violation of the standard. (Armendariz v. Foundation Health Psychcare Services, Inc., supra,
24 Cal.4th at p. 102; see Ramirez v. Charter Communications, Inc., supra,
16 Cal.5th 478.) The court declines to
speculate or make the argument for Plaintiff.
Finally,
the court considers the “Ending Forced Arbitration of
Sexual Assault and Sexual Harassment Act of 2021” (EFAA) preemption claim to
the applicable causes of action. The parties agree EFAA applies to claims arising from sexual
harassment, which Soho maintains only appears in the second cause of action,
while Plaintiff asserts said conduct pervades all claims in terms of
nullification.
The court reviews
limited sections of the EFAA.
(4) Sexual harassment dispute. The
term “sexual harassment dispute” means a dispute relating to conduct that is
alleged to constitute sexual harassment under applicable Federal, Tribal, or
State law.
9
U.S.C.A. § 401
The next section continues:
(a) In general.--Notwithstanding
any other provision of this title, at the election of the person alleging
conduct constituting a sexual harassment dispute or sexual assault dispute, or
the named representative of a class or in a collective action alleging such
conduct, no predispute arbitration agreement or predispute joint-action waiver
shall be valid or enforceable with respect to a case which is filed under
Federal, Tribal, or State law and relates to the sexual assault dispute or the
sexual harassment dispute.
9
U.S.C.A. § 402 (West)
(b) Determination of applicability.
An issue as to whether this chapter applies with respect to a dispute shall be
determined under Federal law. The applicability of this chapter to an agreement
to arbitrate and the validity and enforceability of an agreement to which this
chapter applies shall be determined by a court, rather than an arbitrator,
irrespective of whether the party resisting arbitration challenges the
arbitration agreement specifically or in conjunction with other terms of the
contract containing such agreement, and irrespective of whether the agreement
purports to delegate such determinations to an arbitrator.
9
U.S.C.A. § 402
Harassment claims based on gender discrimination encompasses
a broad base of conduct. (Miller v. Department of
Corrections (2005) 36 Cal.4th 446, 462.)
The operative complaint itself alleges certain claims indicating an
intention to plead EFAA exempt claims, including the causes of action for Discrimination
on the Basis of Gender/Sex in Violation of FEHA; Hostile Work Environment
Harassment on the Bases of Sex/Gender in Violation of FEHA; Failure to Prevent
Discrimination, Harassment or Retaliation in Violation of FEHA; and Wrongful
Termination in Violation of Public Policy. The identified causes of action rely
on key word incorporation and allegatinos of gender/sex based discrimination. The
Discrimination on the Basis of Race, Color Ancestry and/or National Origin in
Violation of FEHA; Retaliation for Engaging in Protected Activity in Violation
of the FEHA; and, Whistleblower Retaliation (Labor Code section 1102.5), lack any suggestion of gender/sex based discrimination.
Defendants challenge the
qualitative nature of the claims for purposes of determining EFAA preclusion. The
standard for determining whether the claim(s) falls within the purview of the
arbitration agreement supports the court examining the underlying allegations
in the operative pleading, as part of the summary review in considering a
motion to compel arbitration. (Engalla
v. Permanente Medical Group, Inc. (1997)
15 Cal.4th 951, 972.) A recent case from the Southern District of New York offers
further insight into the substantive considerations for exemption
determination. (Yost v. Everyrealm, Inc. (S.D.N.Y. 2023) 657 F.Supp.3d 563, 585-586.) The court
found the language EFAA allows, even requires, the court to determine the
sufficiency of the underlying pleading itself—a level of review akin to a
demurrer— for purposes of establishing a valid gender/sex harassment claim and
therefore EFAA preemption. The court finds the District Court opinion logical
and persuasive. The court agrees with the interpretation of the EFAA statute as
requiring a “plausibly pled” claim as opposed simple reliance on conclusions of
gender/sex based adverse employment decisions when considering exemption. (Id.
at pp. 585-587.)
The complaint itself identifies
Plaintiff as an African American female denied an equivalent pay amount for the
same position previously occupied by a Caucasian male employee, and termination
over the theming of a planned event. The event itself, which at least in part
allegedly contributed to the termination decision, became the subject of
dispute over whether the embrace of the “Playboy” and “entertainment for men”
catchphrase objectified women or provided a position of empowerment. The court
finds the disagreement over the appearance of the event itself in no way reflects
any discriminatory animus. The challenges to the appropriateness and social
impact discussion were not directed at Plaintiff due to Plaintiff’s gender. The
circumstances presented in the complaint articulate a genuine discussion over
the represented corporate values and image projected by such an event rather
than any suggestion of employment action based on gender/sex, due to the
suggested choice. (Fisher v. San Pedro Peninsula
Hospital (1989) 214 Cal.App.3d 590, 611.)
The court is therefore essentially
left with a series of conclusions alleging gender/sex discrimination due to a
denied pay raise. Other than the introductory paragraphs of the denied pay
raise commensurate with the predecessor, the complaint reads as a series of
repetitious, elemental conclusions without factual support. The court finds a
lack of support for a pattern, or course of conduct supporting a finding
gender/sex discrimination simply based on a denied pay raise at the time of
effective promotion. (Miller v. Department of
Corrections, supra, 36 Cal.4th at
p. 462.) While the complaint alleges claims well within the defined terms of
the agreement, Plaintiff fails to establish EFAA preemption from enforcement of
the DRA under the substantive standard of review.
The language of the agreement also
includes all officers, directs, employees, representatives, etc., and therefore
imbues the employer with authority to encompass Jarret Stuhl as a proper
party to the arbitration. (See Jensen v. U-Haul Co. of California (2017) 18 Cal.App.5th 295, 302-304.) The agreement
therefore also embraces all named defendants, without any concern for piecemeal
arbitration.
The court therefore finds the
entire complaint subject to arbitration. The court declines the request for
leave to amend. The court finds no support for a party to seek leave in order
to rectify potential omissions and/or otherwise seek to evade arbitration
following review of the court.
“If a court of competent jurisdiction, whether in this State
or not, has ordered arbitration of a controversy which is an issue involved in
an action or proceeding pending before a court of this State, the court in
which such action or proceeding is pending shall, upon motion of a party to
such action or proceeding, stay the action or proceeding until an arbitration
is had in accordance with the order to arbitrate or until such earlier time as
the court specifies.” (Code Civ. Proc., § 1281.4.) The court orders the action
stayed.
The court will set an OSC re: Status of Arbitration and Stay
at the time of the hearing concurrent with the Case Management Conference.
Moving Defendants to give notice.